AJIT K.SENGUPTA, J. - (1.) IN this reference under S. 27(1) of the WT Act, 1957 for the asst. yrs. 1973-74 to 1977-78 the following common question of law has been referred to this Court : "Whether, on the facts and in the circumstances of the case, the Tribunal is correct in law in setting aside the findings of the CWT (A) and in holding that the initiation of the proceedings under S. 17 was invalid ?
(2.) SHORTLY stated the facts are that the assessee trust did not file any return of wealth for the asst. yrs. 1973-74 to 1977-78 under the plea that its wealth was exempt from the wealth-tax in view of s. 5(1)(i) of the Act. However, the WTO called upon the assessee by serving notice dt. 24th March, 1980 under S. 17 of the Act who filed returns of wealth for these five years. The assessee filed returns under protest. The WTO held that there was breach of the provisions of S. 13 of the IT Act and as such, the assessee was not entitled to the benefit of S. 5(1)(i) of the Act by virtue of S. 21A of the Act. The assessee went in appeal before the CWT(A) who held that there was no breach of S. 13 of the IT Act and the assessee was entitled to exemption under S. 5(1)(i) of the Act. In those appeals the assessee also raised an objection as to legality of initiation of proceedings under S. 17 of the Act. The CWT(A) did not decide that point since on merit he found that the assessee was entitled to exemption under S. 5(1)(i) of the Act. The Department then came in appeal before the Tribunal. In those appeals the assessee filed cross objections. The Tribunal decided the appeals and the cross objection by separate orders. The Tribunal held that there was no breach of S. 13 of the IT Act and as such, the assessee was entitled to exemption under S. 5(1)(i) of the Act. The Tribunal held that the CWT(A) should have considered the objection of the assessee as to legality of initiation of proceeding under S. 17 of the Act. This is how the matter went back to the CWT (A) for rendering the decision if the proceedings under S. 17 of the Act were validly initiated. The CWT(A) by order dt. 3rd July, 1987 held that the proceedings were validly initiated.
(3.) THE assessee then came in appeal before the Tribunal. The Tribunal took notice of some more facts as stated hereinafter. In the original assessments of income for the asst. yrs. 1973-74 and 1974-75 the assessee was allowed benefit of S. 11 of the IT Act. However, the ITO was of the opinion that there was breach of s. 13(2)(h) of the IT Act and, therefore, the assessee was not entitled to benefit of S. 11 of the IT Act. He, therefore, reopened the assessments for the asst. yrs. 1973-74 and 1974-75 under S. 147 (a) of the IT Act and withdrew the benefit of S. 11 of the IT Act. The benefit of S. 11 of the IT Act was further denied to the assessee in the asst. yr. 1975-76. The reassessment order for the asst. yr. 1973-74 was set aside in appeal by the CIT(A). The Department then came in appeal before the Tribunal and the Tribunal by order dt. 20th June, 1981 in ITA No. 1404 (Cal) of 1980 held that since the assessment was already completed and new information came in possession of the ITO, it was only a change of opinion and, therefore, the proceeding under S. 147(a) of the IT Act for the asst. yr. 1973-74 was not valid. The Tribunal on merit also held in favour of the assessee that it was entitled to exemption under S. 11 of the Act. In the said appeals the stand of the assessee was that all the facts were before the ITO in the income-tax proceedings who was assessing authority in the wealth-tax proceedings and, therefore, initiation of proceedings under S. 17 of the Act was actuated by mere change of opinion. The stand of the Department on the other hand, was that there was no question of any material being before the ITO sitting as WTO in the wealth-tax proceedings since no return of wealth was at all filed by the assessee for any of these five years and the WTO had no occasion to consider the claim of exemption under S. 5(1) of the Act. The Tribunal reached the conclusion that source of information to the ITO for initiation of proceedings under S. 17 of the Act was his own change of opinion that the assessee was not entitled to benefit of S. 11 of the IT Act. This, in the opinion of the Tribunal could not be valid ground for initiation of proceedings under S. 17 of the Act. The Tribunal, therefore, held that the initiation of proceedings under S. 17 was not valid.;